Exiting the European Union (Excise)

Felicity Buchan Excerpts

Wednesday 3rd February 2021 Commons Chamber

[Felicity Buchan (Kensington) (Con) [V]]

I will focus my remarks on the abolition of VAT RES—the VAT retail export scheme. It has potential implications for my constituency, which is a major international hub of shopping and tourism, and also for rest of the country, since so many manufacturing jobs in luxury goods are scattered throughout the country, including in the north-east, the south-west and Scotland.

Let me just give a few numbers. Some 16 million non-EU international visitors come to the UK in normal times, although clearly not this year. They spend more than £17 billion, of which only £2.5 billion approximately is in tax-free shopping. I am concerned that if we disincentivise these visitors from coming to the UK, we materially affect other areas of our economy, and potentially also the Treasury’s tax take. For instance, these visitors stay in hotels and use restaurants, and the Treasury could lose the VAT on that expenditure. My concern is that these shoppers, who are a very distinct group of people, are highly mobile. The risk is that if we are no longer competitive, and we are the only European country not offering tax-free shopping, they will simply go to Paris or Milan. I am also concerned about the effect that it will have on my high streets, which are clearly already suffering from coronavirus and online shopping.

This measure has already taken effect as of 1 January. I ask the Minister that we continue to review the effect of this measure and that we do a full impact assessment that not only includes the top line, but looks at all the effects on the economy—the loss of VAT, the potential loss of business rates, and the potential effect if retail or manufacturing jobs go. I hope, from the bottom of my heart, that these things do not happen, but I ask the Minister to monitor the situation, and if the data and evidence do not look good, we should be prepared to revisit the decision.